Deloitte Insights Video

Ecosystems, or communities of diverse participants who create greater value through sophisticated models of collaboration and competition, are complex and often confusing, but leaders who understand how to work within these dynamic and adaptive environments can attract passionate communities of participants and reap enhanced business value.

Core systems can be a jumping-off point for enterprise innovation, or the very thing that halts growth in its tracks. In this Tech Trends video, Mark White, CTO at Deloitte Consulting LLP, discusses the questions CIOs should ask themselves in pursuing the rebirth of core IT assets.

More organizations are turning to crisis simulations to test their ability to respond to unexpected events. When well-planned and executed, these exercises provide participants with a realistic sense of their roles and responsibilities during a crisis and help to reveal blind spots. Four organizations from different industries that have undertaken crisis simulations in recent years share lessons they’ve learned and benefits they’ve derived from the experience.

Related Deloitte Insights

Many traditional supply chains are becoming less linear than their name implies, evolving instead into complex “value webs” that bring together entire ecosystems of suppliers and collaborators. Value webs can cut costs, boost service levels, mitigate risks of disruption, and deliver enhanced opportunities for innovation.

Supply chain executives are struggling to attract the technology and leadership skills they need to succeed in a rapidly evolving business environment, according to Deloitte’s third annual supply chain survey. That’s becoming an issue for their CIO peers as well, but one that those IT leaders can help their operational counterparts solve.

Years of optimization, poor planning, and cost reduction have left many global supply chains brittle and vulnerable to disruption. Now, leading companies are exploring ways to use leading edge technologies and operational practices to help supply chains anticipate and prevent potential problems long before they happen.

About this blog

About Deloitte Insights

Deloitte Insights for CIOs couples broad business insights with deep technical knowledge to help executives drive business and technology strategy, support business transformation, and enhance growth and productivity. Through fact-based research, technology perspectives and analyses, case studies and more, Deloitte Insights for CIOs informs the essential conversations in global, technology-led organizations.

Command and Control: Managing Supply Chain Risk

Source: NASA

Four technologies that are helping global companies create stronger, more resilient supply chains.

A severe typhoon damages an electronics components factory in Malaysia that supplies assembly lines in China and Brazil. At company headquarters in Chicago, supply chain managers scramble, unsuccessfully, to find an alternate source of components. The assembly lines quickly shut down, and production stops until the storm-damaged component factory can be repaired. Order fulfillment delays and lost revenue cost the company dearly.

The frequency of these types of supply chain disruptions is increasing, as is the effect they are having on business performance and shareholder value. Just this week, Hurricane Sandy shut down air, rail and sea freight traffic into and out of major shipping hubs in the northeast for two days; businesses are still responding to the resulting disruptions and delays. A recent study found that 85 percent of global supply chains had experienced at least one significant disruption in the preceding 12 months.¹ Another study found that firms that suffered from a publicly-announced supply chain disruption delivered shareholder returns approximately 30 percent lower than their peers.²

During the last three years, supply chain leaders have begun leveraging several technologies to help them manage these risks more effectively. According to Kelly Marchese, a principal with Deloitte Consulting LLP who specializes in supply chain management, these tools—which can be layered on top of existing ERP systems—represent an opportunity for companies to move beyond outdated, inefficient management techniques and create greater visibility which, in turn, supports stronger governance and improved resilience throughout supply chains that have become increasingly complex.

“Many companies are still trying to manage global supply chains with the same tools they were using five years ago,” she says. “They’ve got spreadsheets flying everywhere, and their approaches are fundamentally reactive. These supply chain technologies can provide simulation, visualization, and analytical capabilities that are badly needed right now.”

Supply Chain Toolbox

A variety of internal and external forces are driving an increase in supply chain risks, and demand for tools that can help manage these risks.

“Macro trends such as global­ization and global connectivity are making supply chains more complex and are amplifying the severity of any problems that may arise,” she says. “Others stem from the never-end­ing push to improve efficiency and reduce operating costs.”

All of these trends are challenging traditional notions of “acceptable supply chain risk.” Marchese identifies four types of solutions that global companies are deploying to help improve supply chain visibility, flexibility, resilience, and control:

Mapping and Risk Visualization Tools: These web-based applications help make it possible for companies to create pictorial views of global supply chain risk and identify the areas of greatest vulnerability. They allow supply chain managers to create highly detailed maps that can be layered to reflect all aspects of the supply chain for a particular product or customer, including distances, transit times, customs requirements, and traffic challenges among others. “These maps afford analytic opportunities that are not available with traditional, static spreadsheets,” says Marchese.

Modeling and Simulation Technologies: Given their complexity, many global supply chains must be managed and recalibrated on an ongoing basis. This process can be made easier with modeling and simulation technologies that allow decision makers to gauge the potential impact of improvement initiatives prior to implementation. For example, as part of a new product launch, decision makers may simulate the impact on shipping costs and timelines of building a new warehouse in a particular location, Users can also create detailed simulations to gauge the benefits and costs of various forecasting scenarios, to identify potential risks, and gauge responses to hypothetical disruptions.

Global Information Management Systems: “Many organizations do not currently have the information management (IM) architecture needed to connect all of the facilities and sites in their supply chains,” says Marchese. As a result, critical supply chain data from specific locations or regions is often overlooked. “The stronger a company’s IM architecture is, the better its supply chain data will be,” she says. “Also, it is easier to layer supply chain applications on top of a well-designed IM architecture.”

Business Intelligence (Analytics): According to Marchese, the business intelligence and analytics tools that are transforming other enterprise operations are gaining traction in supply chain management. “The sheer amount of information and analysis these technologies could add in this area is significant,” she says. Marchese says some supply chain leaders under-use analytics because there may be insufficient organizational knowledge in their companies about how these tools can be leveraged, and the potential value they can add. “CIOs should try to educate users about all the possibilities of advanced analytics.”

Risks and Rewards

Marchese notes that in a time of tight budgets and thin margins, supply chain management technologies like these might be difficult to cost-justify.

“It can be a challenge to assign a specific value to managing risk,” she says, adding that the value they can potentially deliver is, nevertheless, significant. “You can use them—in real time— to make fact-based decisions that have a global impact on operations. While companies won’t be eliminating supply chain risk altogether, they will be managing their vulnerabilities much more effectively.”